U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 19712 / May 31, 2006

SEC v. Frederick W. Anton III, Civil Action No. 06-2274 (E.D. Pa.)

The Securities and Exchange Commission (Commission) announced today that it has filed a complaint against Frederick W. Anton III (Anton) in the United States District Court for the Eastern District of Pennsylvania alleging that Anton engaged in unlawful tipping of material nonpublic information about PMA Capital Corporation (PMA). The complaint alleges that Anton, the former Chairman of PMA, a Philadelphia based insurance company, unlawfully tipped David L. Johnson, a former PMA employee, and encouraged him to sell PMA stock prior to the November 4, 2003, public announcement that PMA would be discontinuing its payment of a common stock dividend and increasing the carried loss reserves at its reinsurance subsidiary, PMA Reinsurance (PMA Re).

The complaint further alleges that on October 31, 2003, Johnson contacted Anton regarding an adverse analyst report that Johnson had received about PMA. In response to Johnson's inquiry about the financial health of PMA, Anton replied that PMA was "not doing well", referred to Johnson's large PMA holdings as having "too many eggs in one basket," disclosed that PMA Re would be increasing its loss reserves and that PMA would be eliminating the payment of a common stock dividend. According to the complaint, Anton's disclosure that PMA would be eliminating the common stock dividend and that PMA Re would be increasing its loss reserves revealed material information that was not publicly available at the time. The complaint alleges that although Anton considered information regarding the reserve issue and the cessation of the common stock dividend confidential issues that were likely to have a substantial impact on the stock price and the reputation of PMA, and was aware that it was company policy that material nonpublic information regarding the company should not be disclosed to the public, Anton did not tell Johnson that he expected him to keep the information conveyed in their conversation confidential or that he should not trade based on this information.

Following his discussion with Anton, and on the basis of the information he received, Johnson sold 20,000 shares of PMA stock on October 31, 2003, and 20,000 shares of stock on November 3, 2003. Further relying on the information he received, Johnson tipped his son, who, on November 2, 2003, sold 3,300 shares of PMA stock owned jointly with his wife and 3,600 shares of stock in his capacity as custodian for his daughters. All sales were in advance of the November 4, 2003, public announcement that PMA would be discontinuing its payment of a common stock dividend and increasing significantly its carried loss reserves at PMA Re. The day of the announcement, PMA's common stock closed at a price of $5.03 per share, down 62% from the prior day's close of $10.00 per share. As a result of their sales of PMA stock, Johnson and his son avoided a combined $381,333 in losses.

The Commission's complaint alleges that Anton's conduct violated Section 17(a) of the Securities Act of 1933 (Securities Act) and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder. The complaint seeks a permanent injunction enjoining Anton from further violations of 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, a civil penalty in the amount of $1,143,999, which represents three times Johnson and his son's losses avoided, and a permanent bar against Anton prohibiting him from acting as an officer or director of any public company.